Efficiency, Ethics and Cost in Pharmaceutical Research and Manufacturing Matthew Wirtala Spring 2006

Overview Background Research & Development Manufacturing Advertising and Marketing

Background: Big Pharma in Philadelphia Manufacturing of medicines shifted from small to large scale Robert Shoemaker is credited as the first large- scale producer (glycerin) 1906: Federal Food and Drugs Act Led to FDA as we know it today

Background: Big Pharma 1950s Rapid innovation and growth Major discoveries Antacids, antidepressants, antihistamines, blood pressure medication 1980 Bayh - Dole Act (1980) Hatch - Waxman Act (1984)

Background: 1980s Legislation Bayh-Dole Act Allowed universities and small businesses to take ownership of inventions discovered with federal funding Permitted licensing for transfer of tech to market Hatch-Waxman Act, etc. Eased transition of generic drugs to market Extended patents on some name brand drugs

Background: Prescription Prices 40% of Americans take at least 1 prescription drug 17% take 3 or more In 1980, average cost per prescription was $52/year Currently $504/year Cheaper in Europe and Canada

Research and Development Disease Research (Target Identification) Preclinical Drug Development Clinical

Research and Development: Clinical Clinical Trials Phase II Phase IPhase III

Research & Development: Costs

R & D: Controversies Where are the truly innovative drugs? “Me-too” drugs for patent extensions Only ~30% of new drugs approved by FDA are NMEs Drastic “black-box” increase in costs Where is the money truly going? Why does the pharma industry remain so profitable (4th most profitable in U.S.)?

Manufacturing Most pharmaceutical manufacturing is done via batch processes Quality assurance through sampling and lab testing Little innovation over past several decades Manufacturing costs ~ $112 billion Averages about 35% of revenue in US

PAT: Process Analytical Technology Part of FDA’s “Good Manufacturing Processes for the 21st Century” initiative Data analysis Improved analysis methods = better understanding of variables involved Process analytical tools Many techniques are out of date

PAT continued Process monitoring Helps to develop better understanding of mechanisms at work in production Better control of key variables involved Continuous feedback Quicker response to variation yields higher quality and reduced production costs Manufacturing savings of 15-50%

Marketing & Advertising The industry spent $19 billion on marketing in % of revenues 30% markup in cost to consumer? Major types of marketing and advertising DTCA Marketing to Doctors

Marketing & Advertising DTCA is illegal in other developed countries (except New Zealand) DTCA: Does it help or hurt? People do go to doctors with symptoms highlighted in advertisements Costs of DTCA were only $3.2 billion (12.5% of all promotions) in 2003 However, that is a 246% increase from 1998

Marketing & Advertising Marketing to Doctors $22.4 billion in % increase from 1998 Does it help or hurt? Large expenditure Many doctors are busy, the short meetings can help inform them about new treatments …or are they more like bribes/kickbacks?

Summary No easy answers, many difficult questions Generally agreed: Something’s gotta change R&D: More transparency? More regulations? Manufacturing: Less controversial, still needs a boost Marketing: How much does it help? Questions/Discussion

References Angell, Marcia, M.D. The Truth About the Drug Companies. New York, NY: Random House, 2004 McKinnell, Hank. A Call To Action. New York, NY: McGraw Hill, 2005 Santoro, Michael A. and Thomas M. Gorrie, eds. Ethics and the Pharmaceutical Industry. New York, NY: Cambridge University Press,